Active ETFs emerged as one of the most notable growth areas within Canada’s record-setting ETF market in 2025. Their rise likely reflects how investors appear to be increasingly using active strategies as complements within diversified portfolios, particularly in a year marked by uncertainty and rapid market rotations.
Here are 4 reasons active ETFs may have gained momentum in 2025:
Tactical Flexibility in Uncertain Markets
Market conditions in 2025 rewarded adaptability. Active ETFs, by design, allow portfolio managers to adjust exposures in response to changing economic data, valuation shifts, and evolving risk conditions. This flexibility appears to have resonated in an environment characterized by heightened volatility.
Broader Range of Strategy Design
ETF launches in 2025 reflected a continued expansion in the breadth and complexity of strategy design across asset classes. With roughly 300 new products introduced — and more than 360 when currency-hedged and alternate series are included — the Canadian ETF market grew to over 1,800 listings. Active ETFs increasingly spanned a wide range of approaches, including sector-focused mandates, factor-aware strategies, outcome-oriented income products, and risk-managed allocations. This expansion may reflect an increased interest in tools that can address specific investment objectives rather than broad market exposure alone.
Maturing Investor Understanding
ETFs may be valued by Canadian investors for their apparent transparency, liquidity, and tax efficiency. In 2025, it’s possible that growing familiarity with the active ETF structure may have helped to narrow the historical gap between ETFs and traditional active mutual funds. As understanding deepened, investors may have been more comfortable incorporating active ETFs alongside passive holdings.
Advisor and Portfolio-Construction Use Cases
Active ETFs continued to gain relevance in advisor-managed and institutional portfolios. For certain allocators, active ETFs offered a way to implement tactical or defensive positioning without changing the overall ETF-based framework of a portfolio.
Within this broader trend, certain asset managers have expanded the range of active ETF options available to Canadian investors. For example, as of early 2026, J.P. Morgan has 8 active ETFs listed on the Toronto Stock Exchange (TSX). After entering the Canadian retail market in late 2024, the firm rapidly expanded its lineup through 2025 to offer Canadian-domiciled versions of certain of its global strategies, such as the JPMorgan US Equity Premium Income Active ETF and the JPMorgan Nasdaq Equity Premium Income Active ETF.
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